Property orders: In these challenging times, a UK family law firm asks whether you can reopen final property orders due to the impact of COVID-19. It’s a good question that we could also ask here in Australia. In fact we recently looked at the question of whether you can reopen final property orders and concluded that, while possible, it’s certainly very difficult to pursue and many such applications fail. But could the pandemic factor into an application to vary property orders, given it is so unprecedented in its impact on people’s financial circumstances?
The courts have the impetus of ensuring property settlements are “just and equitable” before making final property orders that are binding. The aim of the settlement is to create fairness, certainty and finality, to protect assets acquired after separation, and to take into account issues such as stamp duty and capital gains tax advantages. The ultimate goal is for former couples to go their separate ways without any ongoing financial ties or obligations, and with the door closed on future litigation—known as the “clean break” principle.
When final orders aren’t final
Where a party does attempt to reopen a property settlement, such an application is commonly referred to as a “section 79A Application”, falling under section 79A of the Family Law Act. This sets out the grounds for when a final property settlement can be set aside and new, more appropriate orders made. This can occur even when there is no appealable error on the part of the court.
The power to vary or set aside orders and reconsider a final property settlement is however limited to certain circumstances only. These circumstances are defined in the Family Law Act to include fraud, duress, suppression of evidence (including failure to disclose relevant information), giving of false evidence or, importantly for this scenario, the very broad category of “any other circumstances”.
However, case law has shown that these circumstances need to be exceptional and result in a significant change in financial circumstances. And most importantly, the outcome has to result in a miscarriage of justice. The key question the courts will try to determine in applications for reopening property settlements is: would the court be more able to do justice if the application was granted?
Significant change in financial circumstances
Sometimes an “event” is accepted to have caused a material change in financial circumstances. For example, people diagnosed with a terminal illness have successfully applied to vary their orders. But major events affecting everyone are more of a grey area. Case law has shown that major economic events like the Global Financial Crisis were not enough to succeed in allowing someone to reopen their finalised property settlement orders. So is the pandemic an event that courts would treat differently to, say, the Global Financial Crisis?
For many, the financial impact of the pandemic will be severe. Many people have lost their jobs as the country goes into recession; others have seen the value of assets stripped. There is also a great deal of uncertainty over how long this crisis will last and the ultimate long term effects of it on people’s resources and investments.
And if you recently entered into a property settlement agreement with your former spouse based on what you thought your financial situation would be, it was unlikely to have taken the pandemic into account. So should you consider varying the orders because you feel they will no longer be able to be implemented?
Note that it is not sufficient to argue that personal fortunes have diminished because property or asset values have changed since orders were made. Fluctuating asset values are accepted as being part and parcel of life and people can’t be allowed to relitigate every time the value of their assets changes.
But has COVID-19 so changed your or your former partner’s financial circumstances to the extent that the agreements made no longer reflect the genuine financial situation and would cause hardship? In that case, you may wish to consider your options, bearing in mind the risks of being handed the legal costs of both sides if you are unsuccessful in your application.
While each case will be considered on its own merits, the problem with the pandemic argument is that we are “all in the same boat” at the moment, so courts will not wish to create a situation where every judgment covering the time of the pandemic (but not taking its effect into account) should be set aside.
Before you decide to pursue court action to vary your property orders, you should seek legal advice on your prospects for success and the risks involved, and also on your out-of-court dispute resolution options. As a start, if discussions and negotiations privately with your former spouse are not possible or are unsuccessful, then you could consider mediation, arbitration and collaboration as further options that will cost less money and time than going to court.
If you need assistance with working out your best way forward, please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Family Law.